Welcome back to the evening before a critical CPI release. Uh, in this video, we're going to chat live Yes! I'll be at on the main Channel about what to expect for tomorrow. Uh, specifically, not only expectations, but what to look for. The most important thing to look for is something that we haven't actually been talking about that much.

It has to do with Drum Powell's discussion that the first part of inflation coming down might be the easiest. that is goods-based deflation and lapping higher year comps. It's easier to have lower inflation or the rate of increase. It's easier for it to feel like that rate of increase is lower where we're comparing to high rates of increases in 2022.

like the 9% that we had in the summer of 2022 when inflation peaked out. it's easier to compare back to those higher numbers and see inflation falling. especially when Goods inflation is driving or Goods disinflation is driving a lot of that declining inflation. The question is, will tomorrow We finally start seeing more goods and services.

uh, deflation together? Specifically, of course Services deflation. This is the big deal. Now there is a belief that yes, indeed, it's possible I Mean, look at the last CPI report that we have the last CPI report suggested that Airline fairs had fallen 13.2% year-over-year That's right here. the year-over-year Colum 13.2% and that they had fallen .9% in just a month over Monon period.

This is also where we got that CPI data that health insurance was at least feeling to some folks potentially rigged. When we looked at health insurance, we saw health insurance decline 34% on a year-over-year basis. Now, of course, that health insurance segment did have a note, a footnote at the bottom suggesting that the calculations for determining the cost for health insurance had been changed, and therefore in the seasonally adjusted data, you should see much smoother information. but in the non-seasonally adjusted data, which is that left number, you would expect to see a larger number.

This was explained by the Bureau of Labor Statistics though of course the only thing that people threw up on Twitter was the following: Oh my gosh, Health Insurance down 34% My health insurance isn't down 34% must be riged. Well, that's how you lose nuance and economic analysis and that's how people end up getting caught flat footed when it comes to economic data. And this is why with the research we do every single day, not just on the channel, but also in the course member live streams and what we do with our team. When we said last, December hey, uh, we might be in the chips recession now.

and if we're in the chips earnings recession now, maybe now is the time to buy and we see a volatile Nike Swoosh AE Why that ended up being the right move? The question is, is it time to rebalance to another sector? Well, my opinion, this is probably still likely to be the most resilient. Uh, at least in the near to medium term. that is the chips and pricing Power stocks in price declining environments. Now that's going to be a little bit more challenging to try to evaluate.

How do you find stocks that actually have pricing power in an environment where everything is deflating? Well, usually the pricing Power style stock at least the definition that we use in our prospectuses for our ETF is the definition that even as prices fall, a company with pricing power is one that reduces prices less than the competition and or sees increasing margin relative to the competition. So perfect example: you look at: Tesla the only profitable North American EV Manufacturer quite frankly Western EV Manufacturer uh, fully battery Electric Vehicle Manufacturer that's profitable. That's Tesla And so trying to find those companies that win in an environment where their margin can expand more than their competition is the challenge. Maybe another stock like that could actually be Lulu Though a lot of folks wonder.

Will Lulu continue its strength? After all, Macy's just got a buyout offer. There's a lot of talk about the lower income consumers having to stretch themselves with more credit card debt delinquencies Rising slightly above 2019 levels and American Express saying the opposite American Express being the company that caters to higher net worth individuals specifically like uh, uh, those making more than six figures and with over a 700 credit score American Express finding that their consumers are not actually pairing back. In fact, that spending seems to be relatively flat amongst those higher income consumers. So what kind of stocks could potentially benefit in a near recession slowing economy where the higher income consumer is now comfortable that their stocks have bottomed out, that their assets have bottomed out, and that we're on the road to recover it? Well again, in my opinion, those are the companies spending money on chips and Manufacturing chips.

the support services for that, as well as individuals who are willing to spend via either American Express Lulu Uh, you know whether it's Tesla or Nas or however, to invest. And so that's why I've been trying to cater my portfolio to that higher income demographic uh, expecting or at least hoping that they would Faire better in this sort of deflationary recession that we could face or near recession that we could face since we might not actually go into recession. What I Do think is very interesting here is this: If you look at infl, this is Bloomberg You find here inflation is less damaging for stocks than deflation I Found this was very interesting. This is an article that's essentially arguing US Stocks have coped better in a cycle that's seen inflation soar to highs since the 1980s.

So in other words, as inflation Rose Everybody thought every company had pricing power because everybody is able to raise prices. But that's not the definition of pricing power I Use I Don't look for raising Rising prices I look for succeeding where nobody else is able to succeed through higher margins. That is a GameChanger Nas has that in the Solar industry Tesla has that in the vehicle industry and so on. We already know this Now this is interesting.

A serious downside surprise for inflation might actually be worse news for stocks than an upside surprise in inflation, even if the immediate response would likely be a Fresh Rally. In other words, they're saying here: if we get a weak inflation report, it's possible stocks could fall on earnings because all of a sudden it's harder to beat those earnings expectations because of deflating prices. Let's take a look at some of the expectations and some of the data we have expectations for tomorrow are that we have flat flat CPI month over month on the core basis though looking to get to3 which is slightly higher than that 0.2 uh for uh, the previous report CPI year year expected to come in at 3.1% versus 3.2 prior, so a slight decline. There's that slowing Jerome Powell is talking about in order for us to actually make Jerome Powell happy.

Like what? what would make Jerome Powell happy which? what makes JP happy Means rate Cuts sooner and what makes rate Cuts come sooner makes people more enthusiastic about stocks. Jpow happy If this is under three I should say happier. So Jpow happy I Think this comes in at 2.9 and you have Jpow very very happy. Uh I'd like to see that Miss Uh, as far as the core, it would also make Jpow very very happy to see this uh, Jpow happy at uh, really? uh, probably something like uh, 0.2 or or lower.

Uh, or we don't. We don't really want that three read that's currently being estimated. that. three read: not ideal.

If we could get some more weakness in housing, maybe we'll see this come down. but we'll also be paying attention to Super Core Super Core is going to be very important, so we'll be covering this obviously tomorrow. Live in the Uh in the public live stream. Make sure you're part of that.

We're going to be on the meet Kevin Live Channel With that, uh, after this live stream, there'll be a redirect to that channel. So that way you can get direct access to that and you can make sure you have notifications on uh but we'll be covering that live and it's going to be a big deal. So uh, that's going to be what What makes Jal happy? But what other information do we know? Well first, I'd like to throw in what do I think? What? What is my opinion of what's going to happen I actually think we're going to So I'm G to write down Kevin's opinion. So let's write down Kevin's opinion here.

Uh, opinion and I'm going to go for three I don't think we're going to get that Euphoria of a 2.9 here. I would really like to see something between 2.4 to 2.6 Unfortunately, A 2.6 is going to get rounded up. a 2.4 is going to get rounded down, but I'd like to see a midpoint read here. I actually think a midpoint read would be good.

Uh, but so I'm just going to make a decision here I'm actually going to go with 2.4 I'd like to see a little closer to that that three, but I want to get that round down to two. I actually think there's a chance where so this would actually look like uh, let's write this correctly: 0.24% Uh, and then I actually think this: Top Line we might get that minus 0.1% and that's really going to set off enthusiasm that the deflation that countries like China and Germany are seeing will come here as well Now we'll see could end up eating. My words could end up being wrong about this, but these are my inflation expectations tomorrow. Now What we can also do is we can compare my inflation expectations to what wall Street's expectations are.

Nick T Put up a fantastic IC consolidation of what inflation expectations are for tomorrow. As you can see here, I'm pretty much only with Piper Sandler on this one. It seems like most of the other analysts are above my expectations. I'll zoom out for a moment or remove myself for a moment.

take a look at this you've got here on the core. CPI Remember I'm at 0.24 I'm only close to Piper Sandler but everybody thinks it's going to come in pretty close to. three. So it would be one heck of a surprise to see that come in soft uh.

headline coming in at Uh 3.0 That sounds relatively reasonable seeing these numbers. Nobody over here negative on this headline. So I'm a little bit of an outlier and this is based on our research and my thinking in terms of what's going on with actual earnings calls and the posturing that I'm seeing. And so this is my opinion rather than potentially the analysis of these these individual analysts I have my own opinion now, of course.

Another thing that I personally like looking at is I like looking at the multivariant core track TR and I think this is going to be very important. This will obviously get updated when we get Pce at the end of the month, but it'll be heavily heavily influenced by the CPI report. and so if I go ahead and pull out everything except Services X housing, which will be a big part of our super core inflation read that we'll get tomorrow. We're probably looking here at uh, a declining set of inflation and a line that actually goes down even if we end up getting a 3% read on that inflation number.

And and that's because, as you could see here, the trend here is clearly down for uh, the services. X housing. This is a trend line though, so it is not uh, a, uh, a point in time. Uh, and uh.

What we expect is as you can see here, we actually had multivaried core Uh was 2.6% in October just roughly closer to that 2% We want to get to that line. By the way, is this blue line here, which if we look over here, we can see that Trend relative to uh, the services X Housing is roughly in the same pattern and and this is what we want to see continue. And if we can get a number under that three handle today or tomorrow, Uh, we we should see this continue to Trend down. Honestly, even if we get three, it should continue to Trend down.

So I'm optimistic about this Uh, and I'm excited to see inflation roll over. I Actually think inflation will roll over a little bit faster than expected. However, I don't want to speculate that it will or will with certainty. Uh, we're obviously watching.

Also, treasury yields move here. If if I'm wrong and the numbers come in at expectations, we shouldn't see much of a move in the treasury market. If I'm right, 10year, treasury yields will probably fall under 4% tomorrow, which will probably lead to some kind of enthusiastic rally in not just the stock market, but also real estate. The real estate market is oddly sensitive to what's happening in the news cycle people don't think that's true, but they're also not in the real estate market every single day like I am we're writing offers.

Every single day we're getting offers accepted. We are making deals happen on a daily basis with house. Haack And it's really exciting. What are the odds that we see a surprise? Well, there's there.

I mean most most of the analysts as you could see in this report right here suggest no surprise? So I mean if you threw me on this list of analysts, you'd probably be at a surprise chance of two out of 14, you know. So so probably on the low side. Uh, then uh, what we'll go ahead and do is consider this this. Bitcoin Vola.

Uh, there. There is some belief that maybe the crypto enthusiasts know that CPI is going to come in hot and that maybe that's why Bitcoin is secretly acting a little bit more volatile because after all, declining inflation is good for risk assets, which obviously Bitcoin is a risk asset. Uh, so let's take a look at some of the other data that we have as well. Uh, moving away from some of these trends.

I I Do want to see some of the bull targets that we have right here for the market uh, as well as bare considerations. Obviously, bare considerations are really higher for longer. This morning on the Uh Market open live stream, which of course will be live tomorrow morning at Uh, probably around 5:15 a.m. a little earlier here.

Well, bare. Market Thesis is that we're not going to see rate Cuts until Q3 of 2024 and if and when they would be very recessionary here. you actually have Yini suggesting the S&P 500 could make it to 6,000 in 2025. We're at 462 right now, so just to divide that out so you understand what that actually sounds like, that would look like a 30% stock market rally over the next two years, a roaring 2020 scenario they suggest and another analyst here interviewed by Bloomberg surveillance who is also from Yini research.

However, in her interview, she suggests that the reason for their bullishness is that most of the earnings recession is already behind us. Very interesting, the earnings recession being behind us I Agree with that. I Actually think we've been through rolling recessions. We had the freight recession, we had the chips recession, we had the consumer cyclicals recession.

we had the consumer discretionary recession. Uh, and we're kind of rolling through the various different aspects of a recession and the econom is actually holding up surprisingly well as well as the fact that just like we discussed on the Meet Kevin podcast we just filmed moments ago, which I encourage you to watch great content with. Mikey Something to consider is that the United States is very sensitive to a recession when it comes to unemployment. This is actually a very big danger for the Federal Reserve that if they overtighten and we start creating a spiral of unemployment, we will unnecessarily so create a substantial recession that is vastly unnecessary.

Despite this though, so the Bond market is still convinced that we will face a recession given that the Bond market still indicates we are at an inverted yield curve level of negative 48 basis points. Very interesting. Take a look at this, Apple is making deals every day in the tech sector. doesn't mean it is good space for the that's interesting, so potentially talk about inflation or disinflation over at Apple and making some, uh, some discounted opportunities I Hear that as well with Apple sort of forbid business that they're willing to cut deals for businesses and otherwise, but that's not terribly uncommon.

A lot of Institutions are willing to do that. If you look at the Market's expectation of inflation, you could see the market expectation of inflation is relatively benign over the last 12 months. The expectation is right here. I'll hide myself for a moment.

Yeah, we could see if we just take the tip of where we are right now. Just the tip. We are at the third lowest point in inflation expectations for the next five years. Of course, this number is very volatile and can change dramatically if we get a bad inflation reading tomorrow.

I Do want to give a little bit of an example though of what's happening with CPI in China and I think this is a a foreshadowing what is to come in America And that is CPI coming in at negative .2% year-over-year and PPI producer price inflation coming in at negative 2.8% I Expect these sort of disinflationary numbers to happen in America as well. Just to be very clear. Uh I I sorry I read this the left number right. Here is the survey.

This was the expectation. This was reality. So inflation actually came in substantially lower than expected. It's one of the reasons I have a thesis that we might actually miss on inflation as well.

To the downside: I Want to be clear that the expectation was that we would have inflation of negative .2% in China I'm going to show you by how many standard deviations basically inflation actually came in or I'll just simplify it I'll just show you a chart that'll show you how bad that Miss was on CPI year-over-year in China and I think it's going to set up for potentially what we could find in America as well. Now keep in mind I Always want to be very transparent because my goal is just to provide you perspective. I'm going to throw this chart up here on screen Uh, but I want to be transparent with you obviously I'm long the stock market Uh I I I Believe disinflation is here I've been believing that over for over a year now. Uh, it, You know it has proven very successful in the first half of the year.

we hit a lot of bumps in the summer, but I don't think the thesis has changed so I'm not willing to like trade or flipflop. I Know people, are you know, convinced or sort of have branded. At least some people have branded me under this idea of of of being a flip floper. Uh, I I think I've been pretty steadfast in this belief for a very, very long period of time.

and if it won't if it's not tomorrow, it will probably happen within the next quarter. So within the next three months uh, would be then in that case, the first quarter of releases in 2024. It's kind of wild to think that we're already going into 2024, but I will not be surprised to see these sorts of Misses in America as well. Take a look at this.

This right here shows you what the forecast was. This is the forecast bell curve right here and this is what we got in: China I Think we are setting up for this kind of reaction in America as well. I Don't know if that'll be tomorrow if it be next month. I Believe it'll be.

Within the next three months we are going to see sudden misses To the substantial downside analysts are going to go. Holy Smokes were caught off guard and I think there could be a very quick and Rapid unwinding of funds that are sitting in money markets Interested in moving over to catch the stock market rally which will also be good for Bitcoin I'm not here to bag on Bitcoin I actually I I love, uh, the underlying blockchain. uh, technology? uh and so I'm a big fan. Uh, obviously you know speculation is ramp in everywhere though speculation is ramping in in penny stocks in meme stocks in various different coins and tokens.

Uh, there's always and even in real estate I See speculation happening right now in real estate. There are people taking out hard money loans and this scares me deathly. There are people taking out hard money loans that are 15% interest. only two points Three points Four Points Five Points that's you know.

percent payment up front doing payable in six months. Well, somebody buys a flip now thinking that oh well. rates will come down in March Therefore, prices will go higher, but then inventory is higher in March you're screwed sh so and then that could actually end up being a very glorious opportunity for house. Haag Uh, I Do uh, want to just provide a very quick opportunity? uh, or to, uh, remind you that we do have a house Hack YouTube Channel I Suspect that by tomorrow we're going to have a a nice house hack video update ready to go I did actually post a video update uh or sorry a a sort of tweet a comment which I actually should have reposted because not that many people are aware of the Twitter account yet.

but House Haack does have the Twitter handle House Haack Homes I just retweeted it. but anyway. uh, quick update there on that share Sears for rega are expected to come out Q1 Our uh, um, first half of 2023 financials are due. Uh, in three days.

so we have external Auditors reviewing those. Uh, that's sort of the way Regas work is is you're a little bit behind, but they're semi anual financials. Uh, obviously we look forward to going to quarterly in the long term. Second House Hack property has been rented.

We've got the one: One fundraising is done. There should not be any. On to one fundraising again. Uh, with the exception of uh, individuals who have warrants, uh, should we decide to call those? uh, you know, our financials again.

doe. In three days here, we've got five more properties under construction, six to eight more in escrow depending on probate approvals Min fund plans are solidifying. That's very important for house haacks. Phase 2 Uh.

and and then of course, course I'm training on a daily basis our teams to make sure we can operate at the company very efficiently. just to give you an example of of my schedule today. And then we'll get back to some of the news here. Uh, this morning? Uh, well.

I didn't get to sleep until about midnight and and today it's really started to hit me like I feel like I'm I I I need to get a little bit more sleep today because I I feel a little uh, pooped physically only I hit about four hours of sleep today and uh I was up until midnight working some rental applications and then which I'm also training somebody else to take over which would be great once once I got the first phase trained, it'll be a lot easier, but it's so important to be involved in the first phase. So we're not building Good Foundations or should I say bad foundations on top of bad foundations? we want to build Good Foundations on top of really good foundations, right? Uh, but anyway. uh then this morning, obviously up early to be ready for the uh stock market open live stream at 525 which we do every single day. the market is open course member live stream at 6:45 Thereafter, was at the airport at 7:45 filming a house hack Update: We flew uh, visited three different cities today, multiple different properties properties.

uh and I was able to be back here uh home, uh by about 3:45 p.m. which is not bad for for having an hour flight commute. you know, each way. uh and then uh then we were uh we were back and uh did our podcast and then here we are doing this update live right now to prep for CPI tomorrow.

uh and then of course after this I'll be going back. uh back to work for house. So it is a law but that is the nature of Entrepreneurship right? This is this is what I've agreed to and signed up to and I actually love it. It provides me a lot of enthusiasm and happiness.

and I make sure to spend a lot of time with my family on weekends, usually by taking them to look at houses for house hack uh which? which is fine because you know then we could still hang out afterwards and go to dinner or whatever. Uh so anyway, uh, that just kind of gives you a little personal update. Uh, but I'm very excited because honestly, uh I feel like uh I I feel like me launching my ETF was the bottom of the stock market I feel like this? the the sort of hair reset was a little bit of like like a a personal like okay now it's the time to get really serious and uh and and I think we're Paving Really Good Foundations here. So uh, very excited and and we're doing an incredible amount of winning in house act.

it's it's almost overwhelming. uh, the amount of winning that we're doing so we're gonna. We're gonna share a lot of that. Uh I have one final test for my series licenses.

I've got uh, seven tests in total that I'll have gone through I Make a joke I didn't know the series 7 was a series of seven tests. Uh, but anyway, people in industry I'll get that uh, but uh yeah, that'll be done. Uh, hopefully this week. So I'm very excited and uh, so let's get back to covering a little bit of news.

As far as uh Nick T I did have another tweet from Nick T that I wanted to cover and this had to do with Trends as well. I'm a big fan of Nick T I uh I I think he's he's uh, well, not only I think does he get the cell phone text from the Federal Reserve but I think he's also, uh, pretty intelligent. So I think he does a good job. uh and I'm happy for the work that he does.

Inflation Expectations Watch a year ahead: Inflation expectations declined to 3.4% last month in the New York Fed and uh consumer survey. That is the lowest level in two years. Three year ahead, inflation expectations remain at the pre-pandemic level. So this is very interesting because last week we had the preliminary read for the University of Michigan Consumer Sentiment survey and consumer sentiment had actually skyrocketed.

Not only had consumer sentiment skyrocketed, but we saw plummet in inflation expectations. That's actually very, very good because I do believe that's going to translate to higher income individuals spending more money on um uh on uh on higher income goods and services. So we'll see American Express and phase Tesla Inflation Expectations To watch. Let's take a look at this actual chart here.

these are the median one and three year ahead inflation expectations. As you can see the three years roughly equivalent to about that 20189 period with the exception of that inverted yield curve we had in 2019. Uh, and then we have the oneye ahead inflation expectations which have almost plummeted. Uh, back to their 2014 lows.

How Wild is that? How Wild is that? I I Find this very very interesting. So uh, it is good. One of the factors when we study history is we look back at 1984 and 1985 and one of the things that you're going to see in 1984 and 1985 is that the Federal Reserve began realizing that oh my gosh, inflation expectations are starting to fall. Maybe we don't have to do as much as we thought I think our Federal Reserve is trending in that direction.

So I'm very excited about that. So uh, with that said, just close the door, close the door. Yes. So with that said, uh, I encourage you to click the redirect link to see me in the live stream for CPI Live Tomorrow Morning Be live at about 5:15 A.m.

Thank you so much for watching this live stream. I Appreciate youall uh Bedell Property Management says somebody Get this guy an app. Appreciate you man. Always calling it like it is.